Technology

Broadcom Agrees to Buy Altima

Telecommunications: Acquisition would broaden company's access to small and medium businesses.

Broadcom Corp., the No. 1 maker of semiconductors for cable-TV modems and digital set-top boxes, agreed Monday to buy closely held Altima Communications Inc. for $560.6 million in stock to gain greater access to small to medium businesses.

Broadcom will issue 2.5 million of its Class A shares for San Jose-based Altima, which makes networking products for switches, routers and Internet appliances and sells mostly in Asia. The transaction, Broadcom's seventh acquisition in a year and one of its most expensive, is expected to close within 60 days.

Buying Altima would help Broadcom expand its products to cater to small to mid-size business networks. The company, which also makes high-speed computer-networking equipment, counts Motorola Inc. and Cisco Systems Inc. as two of its biggest customers.

Broadcom is "really trying to fill out its portfolio of products," said Patrick Wong, an analyst at Zero Gravity Internet Group, which holds less than 1% of Broadcom's outstanding shares.

Altima has a strong presence in Taiwan, which will help Broadcom grow in Asia, Wong said.

As part of the Altima transaction, Irvine-based Broadcom said it will set aside as many as 2.9 million of its Class A shares for issuance once Altima's performance-based warrants are exercised.

Broadcom said it will take a third-quarter charge associated with buying Altima's in-process research and development. It didn't say how much it would write down.